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Capital One’s $35 Billion Acquisition Bid for Discover Raises Regulatory Eyebrows

By  |  February 20, 2024

Capital One’s proposed $35 billion acquisition of Discover has sent shockwaves through financial markets and raised significant regulatory concerns. If successful, the merger would create one of the largest credit card companies in the country, positioning itself as a formidable competitor to established giants like American Express, Visa, and Mastercard, reported Yahoo Finance.

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    The deal, which promises to test the Biden administration’s stance on mega-mergers, comes at a time when antitrust reviews are under intense scrutiny across various sectors. From the consolidation efforts in the airline industry with Alaska and Hawaiian, to the grocery sector with Kroger and Albertsons, to entertainment giants Six Flags and Cedar Fair, regulatory agencies are carefully evaluating the potential impacts on competition and consumer welfare.

    Brian Quinn, a professor at Boston College Law School, told Yahoo Finance, “Any merger among those networks would definitely draw a high degree of scrutiny by regulatory agencies.” Currently, the major players in the US credit card market are Visa, Mastercard, American Express, and Discover. The consolidation of two such significant entities as Capital One and Discover is sure to attract considerable attention from regulatory bodies.

    Related: Capital One in Advanced Talks to Acquire Discover

    If Capital One’s bid for Discover goes through, it would position the company as the largest credit card lender in the US, surpassing even banking giant JPMorgan Chase by that measure. Capital One, renowned for its ubiquitous advertising campaign asking consumers, “What’s in your wallet?” would gain access to Discover’s extensive credit card payment network, boasting more than 300 million cardholders. This would enable Capital One to exert greater influence over merchant fees and establish itself as a major player in the sector.

    Source: Finance Yahoo